Can Firms Change Their Biggest Risks?
Adjusting expectations can yield beneficial results
The legal profession has likely experienced more transformation in the past 20 years than it has in its history – and yet, it can also be remarkably consistent. The risks that solicitors have faced over the years are one example of this predictability. According to an informal Kennedys’ poll about business risks for the legal profession over time, the top three practice areas that generated claims against solicitors in 1999 were Real Estate, Litigation/Dispute Resolution, and Commercial work. Fast-forward to 2023 and Travelers’ claim data suggests that the top three practice areas remained constant. On the one hand, one could say this is simply the nature of the work, considering the large number of things that can go wrong in these areas of the law. But on the other hand, could this mindset lead to an acceptance of risks that might otherwise be mitigated?
“If we expect certain areas of the law to be high-risk, then it’s no surprise when they prove themselves to be high-risk,” said Lianne Shing, senior risk management consultant at Travelers Europe. “But there are opportunities for law firms to reassess assumptions around business risks and take steps to better protect themselves for the long term. We have already seen evidence that such shifts in thinking are possible and can set the tone for positive change in law firms.”
Initiating a domino effect in two key areas
Mental health is one example of a challenge that law firms are managing through incremental change. Today, approximately three-quarters of law firms have initiatives in place to support employees’ mental health – a sweeping shift from a generation ago.1 Granted, questions remain about how well these initiatives are working. (The Law Society says that, according to the 2023 ALM and Law.com Compass mental health survey of the legal profession, lawyers reported experiencing an increase in stress, anxiety and depression. Approximately 71% of the nearly 3,000 lawyers surveyed said they had anxiety, which represents a 5% increase from 2022.) Further, progress in this area can be difficult to measure. How can a firm reliably measure its employees’ mental wellbeing?
However, it’s important to note that just a decade or two ago, it would have been rare, if not unheard of, for a law firm to acknowledge burnout and other mental health challenges that are common among legal professionals, or for these professionals to be willing to speak up about their own struggles. When these conversations happen more regularly, they become less taboo, and can foster a supportive and non-judgmental environment in which employees can be open about mental health and wellbeing issues. From there, firms can more readily work with their insurers to connect the dots between risks and the claims they generate – and then take steps to make positive changes.
“When firms are proactive about getting two things right for their employees – specifically mental health and workplace culture – they can trigger a positive trickle-down effect that sets the stage for better risk management overall,” Shing said. “The fact that we’re having these conversations to help shape the legal profession into one that’s a little more inclusive, supportive, and open is a positive step forward.”
Setting the stage for stronger risk management
The connection between risks and claims is something that Shing and Paul Smith, also a senior risk management consultant at Travelers Europe, study regularly. In law firms, mental health – or rather mental ill health – appears to be having an impact on claims.
“In the last six or seven years, we have seen an uptick in notifications for slips and lapses, which are often driven by stress, pressure and fatigue,” Smith said. “When firms know this, they can take action to move the needle in the right direction on mental health and workplace culture. Perhaps that can include conducting pulse surveys with employees every week or month, keeping track of workloads, or capturing data about other key risk indicators when it comes to stress and absenteeism.”
At the same time, firms can take steps to enhance workplace culture and give employees greater agency over their careers by developing alternate career tracks, fostering mentorships, and encouraging people to own up to mistakes early as a normal, non-punitive part of the learning process. Such actions can not only help a firm manage problems before they blow up into large claims, but they can also inject optimism into firms and give employees a sense of purpose about the positive impact they can make. These workplace attributes are highly valued (and even expected) by the rising cohort of professionals in Gen Z.2 So even firms that resist making such changes may have change thrust upon them if they want to successfully recruit and retain the next generation of talent.
“The expression, ‘The more things change, the more they stay the same,’ can apply to the legal profession in some ways,” Smith said. “But it’s also true that lawyers have agency to counteract entropy and make incremental changes in the right direction that, when taken together, can add up to significant progress.”
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Sources
1 https://www.ibanet.org/document?id=IBA-report-Mental-Wellbeing-in-the-Legal-Profession-A-Global-Study
2 https://www.vantagecircle.com/en/blog/expectations-gen-z-employees
